U.S. hits Russian banks, elites with sanctions over Ukraine crisis

UN Security Council meets after Russia recognized two breakaway regions in eastern Ukraine as independent entities, in New York City
United Nations Security Council meets after Russia recognized two breakaway regions in eastern Ukraine as independent entities, in New York City, on Feb. 21.
REUTERS/Carlo Allegri

By Tom Balmforth, Polina Nikolskaya and Steve Holland

U.S. President Joe Biden on Tuesday revealed new sanctions on Russian elites and two banks as the West tries to stop an all-out invasion of Ukraine by punishing Moscow for ordering troops to two separatist regions it has recognized.

The European Union, Germany and Britain also announced ways they will hit Russia financially as they fear a further incursion is to come, a move Moscow has consistently denied for months.

One of the worst security crises in Europe in decades is unfolding as Russian President Vladimir Putin ordered Russian troops into eastern Ukraine to “keep the peace.” Washington has dismissed as “nonsense” that justification to deploy troops to the regions of Donetsk and Luhansk after Moscow recognized them as independent.

Both adjoin Russia and have been controlled by Russian-backed fighters since 2014.

Weeks of intense diplomacy have so far failed as Moscow calls for security guarantees, including a promise that its neighbor Ukraine will never join NATO, while NATO members offer Putin confidence-building and arms control steps.

“To put it simply Russia just announced that it is carving out a big chunk of Ukraine,” Biden said on Tuesday at the White House.

“He’s setting up a rationale to take more territory by force,” Biden said. “This is the beginning of a Russian invasion of Ukraine.”

In response to Russia not withdrawing its forces from Belarus to the north of Ukraine, Biden said he had authorized additional movements of U.S. forces and equipment already in Europe to strengthen Estonia, Latvia and Lithuania.

“Let me be clear, these are totally defensive moves on our part. We have no intention of fighting Russia,” he said. “We want to send an unmistakable message though, that the United States, together with our allies, will defend every inch of NATO territory.”

Sanctions are being applied to VEB bank and Russia’s military bank, Promsvyazbank, which does defence deals, Biden said. Starting on Wednesday U.S. sanctions will begin against Russian elites and their family members.

Tass news agency cited Promsvyazbank as saying the sanctions would not have a significant effect since it had taken precautionary measures ahead of time. It did not give details.

The hit to Russia’s sovereign debt meant the Russian government would be cut off from Western financing, according to Biden.

Putin did not watch Biden’s speech and Russia will first look at what the United States has outlined before responding, according to Kremlin spokesperson Dmitry Peskov, cited by Russian news agencies.

Earlier on Tuesday, Germany put the brakes on a new gas pipeline from Russia and Britain also hit Russian banks with sanctions. The Russian foreign ministry criticized the new measures as “illegitimate”.

The European Union also agreed new sanctions that will blacklist more politicians, lawmakers and officials, ban EU investors from trading in Russian state bonds, and target imports and exports with separatist entities.

Russian Foreign Minister Sergei Lavrov earlier brushed off the threat of sanctions.

“Our European, American, British colleagues will not stop and will not calm down until they have exhausted all their possibilities for the so-called punishment of Russia,” he said.


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